business insurance - what do you have to have?

[gibbos3]

Please excuse me if this has been posted before.

Just what insurance does a business have to have, BY LAW?

I've heard that a very large business can insure itself for their buildings.
But, what would happen if several members of the public were injured in or around their building?
I thought every business, by law, had to have public liability insurance, but again can they insure themselves for this too? What about staff, if they are injured, they could take a business for thousands if not millions.

[JustinP1]

All employers need employers liability insurance.

As far as I am aware public liability insurance is not mandatory, however due to the possible costs involved it certainly is advised.

[Jemco]

gibbos3 said:

Just what insurance does a business have to have, BY LAW?

OK - 5 minute lesson on compulsory classes of insurance...This is intended as a general guide only. As ever, there are exemptions (although there are few of these)and certain trades/professions require additional covers to meet their industry rules.

There are broadly 3 compulsory classes:

1. Employers Liability - injury to those working under your employment or quasi-employment. So you need cover if you have any employees, voluntary helpers, work experience folks, labour-only sub-contractors, etc. Minimum requirement for £5m cover per employer, but the market usually provides cover at £10m at the same premium.
2. Motor insurance - road traffic act cover (i.e., third party only) as a minimum. A motorist must have in force an insurance policy in respect of liability for bodily injury to or damage to the property of third parties arising out of the use of a motor vehicle on a road.
3. Engineering inspection - statutory inspection cover for certain lifting & pressure equipment (such as, air receivers/compressors, vehicle lifting tables, conveyor belts, passenger or goods lifts).

Whilst not compulsory, I would always advise any business to also take out Public Liability cover - and often Product Liability too.

In addition, it is sensible to consider cover for:
Property (buildings, contents, stock, machinery & plant, computer equipment, etc)
Business interruption (otherwise known as loss of profits cover)
Transit/cargo cover (if you're moving goods within the UK or importing/exporting - even if this is sub-contracted to a haulier of other third party carrier)
Directors & Officers (providing protection against certain financial risks for you rather than the business)
Professional Indemnity (if providing professional advice or designing/specifying products)

The list goes on...travel, personal accident, credit insurance, product recall, money, legal expenses, contractors all risks, breakdown......how long have you got?

The key is to discuss your business with a decent broker who will deal with the compulsory issues that apply to your business and then help you to manage the other covers that might be useful. Beware the insurance "adviser" who simply recommends that you spend more on insurance without explaining why they're making their recommendations and agreeing that with you as a strategy for helping to manage your risks.

Always consider minimising risk first, before throwing money at insurance premiums.

I hope this helps.

Now...questions?

Kevin

[Eric Mc]

Professional businesses such as solicitors or acountants are usually required by their governing bodies to have professional indemnity cover. Whilst not a legal requirement, it is "compuslory" in that the governing body could withdraw your practising certificate or fine you if you didn't take out a PDI policy.

[Gordon Brown]

Most household policies now seem to allow some 'home working' use but I think that would not extend beyond IT for one person, one desk etc.

[gibbos3]

Thank you, Gordon Brown, Eric Mc, Jemco and JustinP1,
You have been most helpful. It's great to know that I can ask the experts for the answers. I owe you one.
Kate.